Many companies and organizations are continuing to look for ways to reduce their internal cost of operations and overhead. Implementing LEAN manufacturing principles has become a very important concept and one that may help improve overall efficiency of operations, directly impacting bottom line results. This blog is written for those organizations.

02/24/2011

New Study Shows Manufacturing Still Biggest Sector of PA’s Economy

A landmark study was released February15th showing that although manufacturing has faced challenges in recent years, it’s still Pennsylvania’s number one economic engine in terms of gross state product (GSP). It’s also the fourth largest provider of jobs – with a family-sustaining average yearly salary of $52,204.

Pennsylvania’s Industrial Resource Centers (IRCs), the study’s lead researcher Dr. Edward Hill, and manufacturers spoke at the state Capitol to reveal major findings and conclusions. Speakers called on lawmakers to help the industry grow through policy changes and programming including: reducing the Corporate Net Income (CNI) Tax, and strategic state investment in areas such as improved management practices, new product development, and workforce training.

The study, “Pennsylvania’s True Commonwealth: The State of Manufacturing – Challenges and Opportunities,” was commissioned by the IRCs – a network of seven non-profits dedicated to assisting small and mid-sized manufacturers with growth projects. Dr. Hill and his research team compiled and analyzed extensive quantitative data, as well as results from focus groups with 70 manufacturing CEOs in order to pinpoint best management practices and ways the state can help increase competitiveness.

Dr. Hill explained that manufacturers in the past decade have faced the Great Recession, an increasingly global economy, and a massively undervalued Chinese currency. In response to the changing markets, companies that adapted and invested in employee engagement and workforce training have shown an incredible resilience.

Challenges have hit manufacturers differently based on the size of their workforce. Between 2006 and 2008, the largest firms shed more than 16 percent of their jobs. But the small (less than 100 employees) were able to stay relatively the same, and mid-sized firms (between 250 – 499 employees) actually added jobs.

IRC Network president Barry Miller, of Philadelphia, announced that manufacturing has the highest multipliers of any industry in the state; in terms of jobs, income and value added. “As manufacturing grows, many other industries – like tech, retail and service – also get a boost,” said Miller. “This means policymakers should look toward expanding our manufacturing base as one of the quickest ways to jumpstart the economy.”

Manufacturing has an impact on the entire state, but has more of an effect on economies in rural counties: accounting for 23 percent of GSP and 16 percent of all employment in 2008.

Productivity (gross state product per employee) in 2008 was $27,000 higher for Pennsylvania manufacturers than for non-manufacturers. The gap may be explained by improved capital and management practices among manufacturing companies

More than 60 percent of the patents issued from 2001 through 2010 to Pennsylvania companies and universities went to manufacturing companies.

For more information on this press conference and the study, please contact the LEAN Accountants of McKonly and Asbury, LLP or visit our IRC partner MANTEC at www.mantec.org.